NEW YORK (MainStreet) Setting aside an allotted amount of money each month to put towards your golden years may seem easy. That is, until life gets in the way.
Your adult child becomes unemployed and moves back home. Your parent needs long-term care. You experience an unforeseen health issue. Suddenly, you find yourself re-evaluating your retirement savings and grasping at any available funds you can wrangle together.
According to a 2013 study by Ameriprise Financial, 90% of 1,000 people surveyed said they have experienced at least one unexpected life event or issue that negatively impacted their retirement savings.
Before your retirement savings are compromised, take a closer look at some of the most overlooked obstacles and consider these ways to avoid them.
1. A Family Member Needs Financial Help
According to a recent study by Merrill Lynch and Age Wave, 62% of people age 50 and older have provided financial assistance to family members during the last five years.
"We found that a very large number of young adults are experiencing a career stall or challenges funding their own lives and are turning to mom and dad for support," says Ken Dychtwald, Ph.D., founding president and CEO of Age Wave, a consultancy focused on aging populations.
"Surprisingly, a lot of off-the-radar generational generosity has taken place, without any expectation for pay back," Dychtwald says. "In our study, inflation rates or market swings weren't nearly as consequential as their own families' needs."
Dychtwald dubs the issue of helping family members with finances "the elephant in the room," since it is rarely discussed during retirement planning. He suggests talking about the feasibility of contributing to family members -- whether an adult child, sibling or parent -- with a financial advisor.
It's also important to keep family members in the loop about your own retirement goals and objectives. If you've been making it clear for years that you are planning to retire by age 65, for example, then it may be easier not to offer financial help if you truly can't afford to provide it.
To take this a step further, consider creating a separate "family helping hand fund" so that you can logically evaluate whether you are in a position to help out a family member without having it interfere with your retirement savings, says Dychtwald.
2. You Get Divorced Later in Life
The divorce rate for couples over the age of 50 has shot up by 700% since 1960, Dychtwald explains. Household income drops roughly 40% for women and 25% for men after a divorce.
Since about 75% of divorcees get remarried, blended families are also an increasing reality and financial priorities in these more complex situations must be discussed from the start.
Consider asking yourself and your partner questions such as: Are your biological children favored when it comes to finances? What do we plan to contribute toward our children's major life events, such as college, weddings, and so on, and will that impact our retirement fund?
"Not bringing these issues up can have a negative impact on your retirement savings and your relationship," Dychtwald warns.
3. You Experience an Unexpected Health Issue
"A loss of health, whether it's a slip and fall or a bad diagnosis, is one of those retirement wild cards that can really change things," Dychtwald says.
According to the Employee Benefit Research Institute's annual survey, more than half of retirees surveyed admitted they are not confident that they have saved enough to pay for their medical expenses during retirement.
The average 65-year-old couple in retirement should expect to pay $163,000 in out-of-pocket expenses for health care, not including long-term care, according to the EBRI.
"You must factor in any potential health care expenses when planning for retirement," says Robert Gregov, certified financial planner at Roche Financial Partners in Princeton, N.J. "Step one needs to be determining what your budget looks like, what your incomes are and what your outflows are. Then take what is left over and discuss the best plan of action for your retirement savings."
4. You Put College Costs Ahead of Retirement Costs
"A lot of people pay for their kids' college costs ahead of saving for retirement, and that often proves to be a big mistake," says Scott Weiss, certified financial planner at Weiss Financial Group in Mahopac, N.Y.
"Many people don't want to see their children with student loans," Weiss says. "On the flip side, sometimes they forget to think about the repercussions of not funding their retirement and the possibility of needing their own children to help support them."
To avoid this dilemma, begin saving for retirement as early as possible and once you're sure that base is covered, then think about college costs. "You can always finance college or help children pay for their loans down the road," Weiss explains.
5. You Leave Work Too Early
"The reality is that today, retiring in your 50s is very difficult," Weiss says. "With people living longer, you need to set aside quite a bit more when you're planning for retirement."
Dychtwald adds that retiring too early may not only compromise your finances, but also your overall happiness. "People assume that when they retire it will be like heaven on Earth, but a lot people find that they are unhappy and retirement itself is a wasteland," he explains. He suggests making sure you have enough money set aside to truly enjoy your golden years.
"The average retiree watched an average of 49 hours of television a week last year," Dychtwald says. Seek more fulfilling ways to spend your time, and of course, make sure you have the financial resources available to do so.
--Written by Renee Morad for MainStreet